MRMA Calls for SST Review on Commercial Rentals to Avoid Burdening End-Consumers

Marcus Liew
Jul 5
2 min read

The Malaysian REIT Managers Association (MRMA) has urged the government to review the proposed 8% Sales and Services Tax (SST) on commercial rental and leasing services, warning that it could result in higher costs for consumers and add inflationary pressure to the economy.

The SST expansion, expected to take effect on July 1, has raised concerns across multiple industries, especially the real estate and retail sectors, where tenants could pass on the added tax burden to customers through higher prices for goods and services.

MRMA Warns of Inflationary Ripple Effect

In an official press statement, MRMA chairman Leong Kit May stressed that while the association supports fiscal sustainability, the tax on commercial rental income could have immediate negative consequences:

“The expanded SST on rental income creates immediate headwinds for the rakyat. Businesses will likely pass on these costs, leading to elevated price levels that could reduce household purchasing power,” said Leong.

Industry Seeks Dialogue with Government

MRMA has requested constructive engagement with the Ministry of Finance (MOF) to discuss ways to mitigate the impact of the SST rollout, particularly on:

REIT tenants, many of whom may face double taxation
Consumers, who will feel the brunt of rising costs
REIT industry growth, which could be affected by reduced tenant demand

Key Requests from MRMA

To ensure a more balanced tax policy, MRMA recommends:

1. Clarifying Exemptions

Clear guidance on which rental transactions are exempt from SST, especially for tenants in REIT-managed properties.

2. Phased Implementation

Gradual rollout of the tax to allow businesses and investors time to adjust without triggering abrupt rental hikes.

3. Stakeholder Engagement

Continuous collaboration between policymakers, industry leaders, and tenants to prevent unintended market consequences.

“We urge policymakers to provide clarity and flexibility during this transition. MRMA remains committed to supporting Malaysia’s fiscal goals while ensuring long-term stability in the REIT sector,” the association said.

Why This Matters: The Bigger Picture

This proposed tax change comes at a time when:

Malaysia is battling inflationary pressures
Businesses are recovering from post-pandemic challenges
Consumers are already facing higher living costs

Without mitigative measures, the 8% SST on commercial leasing could:

Shrink disposable income
Increase the cost of doing business
Disincentivise investments in commercial real estate

What’s Next?

The MRMA advises all investors, property managers, and commercial tenants to:

Stay informed on potential SST exemptions and changes
Monitor official MOF guidance
Prepare for price structure adjustments if the tax proceeds as planned

Final Thoughts

While the government’s aim to boost fiscal sustainability is valid, MRMA’s warning is a timely reminder that tax policy must be designed with economic realities in mind.

If poorly implemented, the 8% SST on commercial rentals could lead to a chain reaction of cost increases, putting further pressure on consumers, businesses, and REIT stakeholders.

As the July 1 rollout date nears, clear communication and responsive policymaking will be crucial to ensuring that Malaysia’s tax reforms do not inadvertently burden the very people they aim to support.